American Shipbuilding Association

American Shipbuilder

Volume 15, Issue 7                                                                     December 2009

FY 2010 Defense Appropriations Bill Provides $ 12.5 Billion for 7 Naval Ships

On December 16th, the House of Representatives passed the FY 2010 Department of Defense Appropriations Act (HR 3326, as amended). The Senate passed the bill on December 19th. The legislation appropriates $12.5 billion for seven new naval ships. Congress provided funding for the procurement of one Virginia class submarine, one DDG-51 Arleigh Burke multi-mission destroyer, two T-AKE combat logistics force ships, two littoral combat ships, and one joint high speed vessel. The bill also funds the completion of the third DDG-1000 Zumwalt class multi-mission destroyer, and the tenth LPD-17 amphibious transport dock ship.

Additionally, Congress appropriated $578 million for the advance procurement of components for two DDG-51 destroyers in FY 2011. This is an increase of $250 million above the FY 2010 budget request. During conference of the bill, the House adopted the Senate’s recommendation to add $170 million in advance procurement funding for the LHA-7 amphibious assault ship. This advance funding will help to achieve a construction start in FY 2011. Congress decreased the budget request for three littoral combat ships to two ships and cut $300 million from the request, but increased the amount appropriated for each of the two vessels to $540 million. In the report accompanying the bill, the House and Senate stated that the reduction is “consistent with the Navy’s revised acquisition strategy for the program, which calls for down selecting to a single ship design in fiscal year 2010, versus the two designs that the program has been carrying.” Congress has also directed the Navy to provide monthly progress reports on construction costs of the littoral combat ship program.

Title XI Receives $35 Million in FY 2010 Appropriation Bills; $100 Million Provided in Jobs for Main Street Act

In an effort to stimulate job growth and invest in America’s Marine Highway, the Jobs for Main Street Act (HR 2847, as amended) provides $100 million for the Title XI Ship Loan Guarantee Program. The bill passed the House of Representatives on December 16th. The Senate will not consider the legislation until 2010. The funding is derived from a redirection of unused Troubled Asset Relief Program (TARP) savings to fund investments in America’s infrastructure. Congress appropriated a combined $35 million for new Title XI loan guarantees in the FY 2010 Transportation and Defense Appropriations bills ($5 million was provided in the Transportation Appropriations Bill and $30 million was included in the National Defense Sealift Fund of the FY 2010 Department of Defense Appropriations Bill).

The Title XI program, administered by the Maritime Administration (MARAD) of the Department of Transportation, provides small and medium sized ship owners with a federal guarantee of 87.5 percent of commercial bank loans for a period of 25 years for the construction of commercial ships in the United States. Title XI financing is used by U.S. ship owners to replace and expand their fleets of ships to meet the Nation’s energy transportation needs, domestic commerce requirements, and to serve as a military auxiliary fleet in times of emergency. The past and current Administrations have failed to request annual funding for new loan guarantees. Congress has regularly sought to provide funding to keep the program solvent. With the tightening of the credit market and hesitancy of lenders to agree to large commercial loans, the federal guarantee provided through the Title XI program is essential to making financing for vessel construction available.

The Title XI program has historically had a 20 to 1 multiplier, generating $20 million in ship construction in the United States for every $1 million appropriated for the program. Once an application for a Title XI loan guarantee is approved, the construction order is immediately placed in a shipyard, instantaneously creating and sustaining thousands of jobs in the shipyard and supplier base for two to three years.  

Virginia Members Urge Support for Shipbuilding Jobs

Prior to adjournment for the year, Representatives Bobby Scott (D-VA), Glenn Nye (D-VA), and Rob Wittman (R-VA) sent a letter to the Speaker of the House urging that as Congress continues to examine ways to stimulate job retention and growth, that the shipbuilding industry of the United States be given consideration.

Members of the Virginia delegation highlighted that America’s Navy and Coast Guard have unfunded ship requirements. Additionally, this country’s commercial ship owners need access to affordable financing to build ships for domestic commerce, and for energy exploration and development. Investment in America’s sea services should be a national priority because the nation has a large unfunded ship requirement, and because of the hundreds of thousands of highly skilled jobs created and sustained in all fifty states when ships are built.

Industry News

Shipbuilding Convention Resolution Adopted

The shipbuilding industry adopted a resolution at its annual convention on December 1st, pledging to work with the Administration and Congress to make recapitalization of the country’s Navy, Coast Guard, and merchant fleets a national priority. Following is the text of the resolution:

GROW AMERICA’S SEA SERVICES  

W hereas the Nation has a requirement for new ships to expand the fleet of the U.S. Navy from 285 ships to 313 ships; and

W hereasthe Nation needs to replace its aging fleet of Coast Guard cutters and icebreakers; and

W hereas affordable and available financing is needed for ship owners to replace and expand their fleets of commercial ships to economically carry the Nation’s cargo and expand domestic energy resources; and

W hereas development of a Marine Highway for the domestic shipment of cargo by sea would reduce congestion on roadways, save highway infrastructure costs, and realize a cleaner and more efficient transportation network; and

W hereas building ships for the Sea Services creates and sustains hundreds of thousands of good paying manufacturing jobs in all 50 states;

B e it resolved that the shipbuilding industry commits to working with the Administration and Congress to

1. increase the shipbuilding budgets of the Navy and the Coast Guard in fiscal year 2011; and
2. budget $60 million for the Title XI Ship Loan Guarantee Program; and
3. to support development of the Marine Highway for domestic cargo shipments.

Fairbanks Morse Engine and Nelson Stud Welding Recognized for Outstanding Sea Power Ambassador Recruitment

Cynthia L. Brown , President of the American Shipbuilding Association, presented Sea Power Ambassador Awards to Fairbanks Morse Engine, headquartered in Beloit Wisconsin, and Nelson Stud Welding, located in Elyria, Ohio, on December 1 st.

Become A Sea Power Ambassador

America’s sea services need your help. The U.S. Navy currently possesses only 285 ships, which is the smallest naval fleet since 1917. America’s Coast Guard fleet is one of the oldest in the world. As 2010 begins, show your support for America’s Sailors, Marine, and Coast Guard personnel by becoming a Sea Power Ambassador. As a Sea Power Ambassador, you will receive news articles about decisions that are being made that will impact the security of this country. You will also have the opportunity to “take action” and let your elected officials know that rebuilding America’s sea services must begin today. Visit the Sea Power Ambassador website and click Join Now!

ASA Welcomes New Members

The Hiller Companies, Inc.

Headquartered in Mobile, Alabama, the Hiller Companies designs and provides fire protection equipment for commercial and shipyard customers. The company specializes in fire detection and alarm; fire suppression; specialty flooring; sprinklers; combustible and toxic gas detection; system service; and fire and safety commodities.

NSC Technologies, Inc.

Well Said!

“A powerful Navy we have always regarded as our proper and natural means of defense; and it has always been of defense that we have thought, never of aggression or of conquest…
We shall take leave to be strong upon the seas, in the future as in the past.
And there will be no thought of offense or provocation in that.

President Woodrow Wilson
Annual Message to Congress
December 8, 1914